Coordination success and interpersonal perceptions: matching versus mismatching

Coordination is an essential part of social functioning. The authors distinguish 2 types of coordination: matching and mismatching. In matching, coordination is successful if parties choose the same action. In mismatching, coordination is successful if people choose different actions. In 3 studies, the authors investigated the downstream social consequences of tacit coordination for interpersonal perceptions. In all studies, participants repeatedly choose between 2 bets with equivalent expected values, and payoffs increased either when they choose the same bet or when they choose different bets. In the 1st 2 studies, coordination success increased the perceptions of interpersonal similarity and liking when matching was required but not when mismatching was required. The authors' interpretation is that matching responses and coordination success had countervailing effects in the mismatching task. Also, percentage of matched responses did not affect perceptions when coordination was not required (Experiment 2). In 4 person teams, a frequently matching partner was viewed more favorably (smarter, more similar to self, and more liked) than were other teammates, even when mismatching increased payoffs (Experiment 3).     

Satisficing when buying information

In two studies expected value, expected utility, and satisficing approaches to one's decision to buy information were compared. The task for the first study was to judge the maximum worth of information by bidding to reduce an ambiguous prospect to a risky one when given an option between a risky prospect and an ambiguous one. A within-subjects design was used in which, for the risky prospect, the probability of gain and expected value were varied. The results were inconsistent with both expected value and expected utility models, but were consistent with a satisficing strategy. The second study was similar to the first but with context changes in the stimuli and a slightly different decision task. The results showed that the effects are robust across task and context. The main behavioral effect is that people appear more willing to buy information that may decrease an expected loss than information that may increase an expected gain. A decision justification principle is consistent with that effect.     

Use of absolute and comparative performance feedback in absolute and comparative judgments and decisions

Which matters more—beliefs about absolute ability or ability relative to others? This study set out to compare the effects of such beliefs on satisfaction with performance, self-evaluations, and bets on future performance. In Experiment 1, undergraduate participants were told they had answered 20% correct, 80% correct, or were not given their scores on a practice test. Orthogonal to this manipulation, participants learned that their performance placed them in the 23rd percentile or 77th percentile, or they did not receive comparative feedback. Participants were then given a chance to place bets on two games—one in which they needed to get more than 50% right to double their money (absolute bet), and one in which they needed to beat more than 50% of other test-takers (comparative bet). Absolute feedback influenced comparative betting, particularly when no comparative feedback was available. Comparative feedback exerted weaker and inconsistent effects on absolute bets. Absolute feedback also had stronger (and more consistent) effects on satisfaction with performance and state self-esteem. Experiment 2 replicated these effects in a different university sample, and demonstrated that the effects emerge even when bets are placed after participants rate their satisfaction with their performance (although these ratings do not mediate the effect of feedback on bets). These findings suggest that information about one’s absolute standing on a dimension may be more influential than information about comparative standing, partially supporting a key tenet of Festinger’s [Festinger, L. (1954). A theory of social comparison processes. Human Relations, 7, 117–140.] theory of social comparison.     

Action Dynamics in Intertemporal Choice Reveal Different Facets of Decision Process

Two experiments were conducted to examine decision process in intertemporal choice with spatial and temporal action dynamic measures generated from cursor movement. The effects of the context valence (gain and loss) and magnitude of the payoffs (small and large) were investigated. Other factors examined were differences between decisions made at versus away from the indifference point and response variability dependent on what was selected (delayed versus non‐delayed/less‐delayed payoff). Using principal components analysis, decision process is described with three orthogonal components. General decision difficulty is encompassed by two components: (1) Conflict, depicted by Idle time and deviations from a direct choice path, and (2) decision uncertainty or Wavering, described by left‐right directional flips. A general Locomotion factor was also present. In Experiment 1, Conflict was best at capturing the gain/loss and magnitude context effects. Greater Conflict was observed in the loss context and the small magnitude condition. When choices were closer to the indifference point, Wavering was most salient. In Experiment 2, when selecting larger, delayed payoffs, both Conflict and Wavering increased suggesting that controlling the temptation of selecting the sooner, smaller reward entails effort. By analyzing trajectories, the study advances knowledge of the construct validity of different action dynamic measures and supports the distinction of decision uncertainty and decision conflict. Copyright © 2015 John Wiley & Sons, Ltd.     

Collective decision making reduces metacognitive control and increases error rates,particularly for overconfident individuals

This research aimed to investigate the changes in judgment accuracy, confidence, control thresholds, and decision outcomes when people act in two-person groups (dyads) compared with acting individually. First, we used interacting dyads to determine the metacognitive and behavioral outcomes of collective decision making and compared them with those of individuals. Second, we examined whether these changes were related to the trait-confidence and bias of individuals working together. Using a within-person design, undergraduate psychology students (N = 116) completed a General-knowledge Test individually, then together as a dyad. Each question was accompanied by a confidence rating and a decision to bet $10 on the answer. Dyads had significantly higher confidence and lower control thresholds than individuals. They were also significantly more decisive (made more bets) and reckless (lost a higher rate of bets) than when working alone. Thus, we observed a higher rate of decision errors for groups than individuals. The results also demonstrated the important role of individual differences: Overconfident individuals became even more confident, decisive, and reckless when working together compared with less confident or underconfident individuals working together. These findings have important theoretical and applied implications for collective decision making; metacognitive bias and potentially control thresholds may be targeted to alleviate the larger error rates and guide the formation of more effective groups.     

The effects of control on betting: paradoxical betting on items of high confidence with low value

Traditional decision theories emphasize the probabilities and values of possible outcomes, but decisions may also be influenced by perceived control, with control defined as probability alterability. In 3 experiments, participants were offered bets on their own answers to general knowledge questions, bets that are characterized by control. The bets were fair if participants' reported confidence was well calibrated, positively valued if participants were underconfident, but unfavorable when participants were overconfident. Bet acceptance was a steep, linear, increasing function of confidence that is termed paradoxical betting. This pattern was generally contrary to the value of bets (considered either as average outcome or as subjective utility) and was steeper in slope than matched bets on apparently random events in Experiment 3. The author argues that control is a fundamental determinant of decision making that is readily incorporated in some existing models of decision weighting.     

Replicated alternatives and the role of confusion,chasing, and regret in decisions from experience

The current paper explores choice among alternatives that can be classified into distinct classes. All the members of a particular class were ‘replicated alternatives’: they promised the same payoff distribution. Information to decision makers was limited to feedback concerning the realized (obtained and foregone) payoffs. Experiment 1 demonstrates that increasing the number of replicated alternatives creates confusion (which facilitates random choice) and changes the implications of the tendency to chase recent returns (i.e., select the alternative with the best recent outcomes). This effect, termed ‘confused chasing,’ facilitates risk seeking even when this behavior impairs expected earnings. Experiment 2 reveals that increasing the number of replicated alternatives can reduce (but does not eliminate) the tendency to underweight rare events. Experiment 3 shows that the relative importance of chasing and confusion is sensitive to the likelihood of realizing lower payoffs than the forgone payoffs. The main results are summarized with a simple model assuming that payoff sensitivity decreases with experienced regret. Copyright © 2006 John Wiley & Sons, Ltd.     

Modeling the Impact of Control on the Attractiveness of Risk in a Prospect Theory Framework

Many decisions involve a degree of personal control over event outcomes, which is exerted through one's knowledge or skill. In three experiments we investigated differences in decision making between prospects based on a) the outcome of random events and b) the outcome of events characterized by control. In Experiment 1, participants estimated certainty equivalents (CEs) for bets based on either random events or the correctness of their answers to U.S. state population questions across the probability spectrum. In Experiment 2, participants estimated CEs for bets based on random events, answers to U.S. state population questions, or answers to questions about 2007 NCAA football game results. Experiment 3 extended the same procedure as Experiment 1 using a within-subjects design. We modeled data from all experiments in a prospect theory framework to establish psychological mechanisms underlying decision behavior. Participants weighted the probabilities associated with bets characterized by control so as to reflect greater risk attractiveness relative to bets based on random events, as evidenced by more elevated weighting functions under conditions of control. This research elucidates possible cognitive mechanisms behind increased risk taking for decisions characterized by control, and implications for various literatures are discussed.     

Dyadic decisions with numerical and verbal probabilities

The goal of the research was to compare decisions under risk in a situation in which forecasters (F) communicate to decision makers (DM) either numerically (e.g., .70) or verbally (e.g., likely) about the chances that a binary event will occur. Following each forecast, the DM bid for a winning or losing lottery based on the event. In Experiment 1 Fs and DMs also provided numerical translations of each verbal forecast after the DMs' bid. In Experiment 2 the DMs provided membership functions over the [0, 1] interval for each phrase used by the Fs. The primary results were: (a) extreme similarity in the DM's bids and rates of bidding under the two modes of communication; (b) greater variability in bids to specific verbal than numerical forecasts; (c) a pattern of bids, in which DMs demonstrated risk seeking for gains and risk neutrality for losses; (d) DMs' numerical translations in Experiment 1 were closer to .50 than were those of Fs; and (e) phrases selected by Fs had high membership values to DMs for the probabilities the Fs were attempting to describe. Points (a), (b), (d), and (e) are consistent with the ν-μ model which assumes that the vague meaning of a probability phrase can be represented by a membership function over the [0, 1] interval, and that in reaching a decision the DM focuses on a range of probabilities with sufficiently high membership. Point (c) is speculatively attributed to social aspects of the dyadic situation, and requires further investigation.     

Ambiguity Aversion,Comparative Ignorance,and Decision Context

People typically find bets less attractive when the probability of receiving a prize is more vague or ambiguous (Ellsberg, 1961). According to Fox and Tversky's (1995) comparative ignorance hypothesis, ambiguity aversion is driven by the comparison with more familiar events or more knowledgeable individuals, and diminishes or disappears in the absence of such a comparison. In this paper we emphasize that “comparative ignorance” refers to the state of mind of the decision maker. We extend the comparative ignorance hypothesis by documenting four new ways in which decision context can affect willingness to act under uncertainty that do not rely on the comparative-noncomparative evaluation paradigm used in previous studies. First, people find uncertain bets more attractive when preceded by questions about less familiar items than when preceded by questions about more familiar items. Second, the preference to bet on more familiar domains is less pronounced for the first domain evaluated on a survey than for later domains. Third, people find bets less attractive when they are provided with diagnostic information that they do not know how to use, compared to when they are provided with no such information. Finally, people are sensitive to the relative competence of their counterpart when playing a simple competitive (matching pennies) game, but not when playing a noncompetitive (coordination) game that has the same mixed strategy Nash equilibrium.     

Framing decisions: Hypothetical and real

This paper addresses the general issue of whether the practice of investigating human decision making in hypothetical choice situations is at all warranted, or under what conditions. A particularly relevant factor that affects the match between real decisions and hypothetical decisions is the importance of a decision’s consequences. In the literature experimental gambles tend to confound the reality of the decision situation with the size of the payoffs: hypothetical decisions tend to offer large payoffs, and real decisions tend to offer only small payoffs. Using the well-known framing effect (a tendency of risk-aversion for gains and of risk-seeking for losses) we find that the framing effect depends on payoff size but hypothetical choices match real choices for small as well as large payoffs. These results appear paradoxical unless size of incentive is clearly distinguished from the reality status of decision (real versus hypothetical). Since the field lacks a general theory of when hypothetical decisions match real decisions, the discussion presents an outline for developing such a theory.     

Illusory Personal Control as a Determinant of Bet Size and Type in Casino Craps Games1

Langer's (1974, 1975) theory regarding the conditions under which subjects performing a chance task will suffer from an illusion of control over the outcome has specified 6 conditions proposed to enhance the illusion ofcontrol in chance tasks. A number of studies have applied her theory and predictions to gambling, a real‐world arena of chance tasks where participants have been observed to act as if the outcomes are controllable by the use of various “logical” (acting on the “gambler's fallacy”) and superstitious strategies (e. g., blowing on dice). Thus far, however, these studies have not been conducted in naturalistic gaming environments and have yielded mixed results regarding the operation of the illusion of control. The present research offers the first study of the operation of the illusion of control in such a real‐world context. In order to examine the effects of active vs. passive task participation (a variable hypothesized by Langer to affect the illusion of control), patrons of Reno casinos were observed placing craps bets on their own and another yoked patron's dice rolls. It was hypothesized that subjects would (a) place higher bets and (b) place more “difficult” bets (e. g., where only one specific number, as opposed to any of several numbers, may win) on their own rolls (when they would experience the illusion of control over the outcome) than on other patrons' roles (when they would not experience such an illusion). That is, players were expected to generally adopt riskier betting strategies when throwing the dice. Results supported the hypotheses.     

The differential processing of price in gains and losses: the effects of frame and need for cognition

Perhaps the most fundamental principle of decision theory is that more money is preferred to less: the principle of desired wealth. Based on this and other principles such as reference dependence and loss aversion, researchers have derived and demonstrated mental accounting (MA) rules for multiple outcome situations. Experiment 1 tested the invariance of the desired wealth principle and two mental accounting rules (mixed gain, e.g. $100 gain and a $50 loss; mixed loss, e.g. $100 loss and a $50 gain) across types of decision maker and frame. The desired wealth principle and the MA rule for mixed gains were found to vary depending upon (1) the thoughtfulness of the decision maker (need for cognition, NC), and (2) the frame used to describe gains and losses (e.g. a gain of $x versus a gain of y%). The MA rule for mixed losses, however, was found to be immune to framing effects, even among people who are generally less thoughtful. The differential processing of gains and losses across frames (dollar versus percentage) and individuals (less versus more thoughtful) was tested further in Experiment 2 where evaluations of mixed losses were made at the level of the gestalt as well as the constituent (the gain and the loss being evaluated separately). Framing effects were evidenced only among subjects lower in NC and only when the constituent gain was evaluated. Evaluations of the overall mixed loss and the constituent loss were comparable across situation and individual, suggesting that losses motivate greater processing among people otherwise inclined toward cognitive miserliness. Copyright © 2000 John Wiley & Sons, Ltd.     

Beyond mere ownership: transaction demand as a moderator of the endowment effect

Transaction demand refers to the motivation to complete a transaction. As transaction demand increases, owners should sell at lower prices and buyers should buy at higher ones. It was predicted that the endowment effect—the tendency for minimum selling price to exceed maximum buying price for a particular commodity—should be minimized when buyers and sellers have high transaction demand. The results of two experiments supported this hypothesis: In Experiment 1, the endowment effect was observed when participants imagined another individual wanting to buy from or sell to them, but not when they imagined wanting to buy from or sell to another individual. In Experiment 2, a reversal of the endowment effect was observed when transaction demand was high for both prospective buyers and sellers. The findings highlight the importance of motivational factors in addition to other factors (e.g., loss aversion, reference dependence) in determining behavior.     

Social motives and strategic misrepresentation in social decision making

In 4 experiments, the authors studied the influence of social motives on deception and strategic misrepresentation. In a newly developed information provision game, individuals faced a decision maker whose decision would affect both own and other's outcomes. By withholding information or by giving (in)accurate information about payoffs, participants could try to influence other's decision making. Less accurate and more inaccurate information was given when the decision maker was competitive rather than cooperative (Experiment 1), especially when participants had a prosocial rather than selfish value orientation (Experiments 3 and 4). Accurate information was withheld because of fear of exploitation and greed, and inaccurate information was given because of greed (Experiment 2). Finally, participants engaged in strategic misrepresentation that may trick competitive others into damaging their own and increasing the participant's outcomes.     

Biased evaluations of randomly determined gambling outcomes

We investigated whether people are biased in their evaluations of gambling outcomes even when the outcomes are chance determined. In Experiment 1, subjects exhibited a bias in their evaluations of the outcomes of a computerized bingo game. Manipulating whether the outcome of the first round was determined by a series of anomalous or “fluke” events had a greater impact on the subsequent bets of those who had lost their bets than on those who had won. Losers appeared to use these fluke events to explain away the outcome, whereas winners discounted their significance. Experiment 2 tested the limiting conditions of these findings by manipulating whether or not subjects were induced to perceive an “illusion of control” over the outcomes by allowing some of them to make a series of incidental choices during the contest. Only those subjects in the illusion of control conditions exhibited a bias in their evaluations of the outcome of the first round. The connection between this research and earlier behavioral theories of the psychology of gambling is discussed.     

Choice among bets and revision of opinion

Ss estimated subjective probability (SP) on the basis of a sample in a hypothesis testing situation by choosing the subjectively optimal bet cat of a list and by stating verbal odds. In the choice among bets situation SP was inferred on the assumption of subjectively expected value maximization. Both estimates of SP were conservative compared with the theoretical prediction and did not differ significantly. This suggests that (a) utility had no distorting effect on the choice of the bet and (b) conservatism is not specifically bound to the use of special number scales or response sets.     

The role of potential loss in the influence of affect on risk-taking behavior

In three experiments the influence of positive affect on risk-taking behavior was examined. In Experiment 1 subjects who received a free gift of candy, compared to those in a control group, were willing to pay increasingly more for lottery tickets as the prize rose from $10 to $90 and as the probability of winning rose from .10 to .90. In Experiment 2 subjects who received a free gift of candy, compared to those in a control group, were willing to pay more to buy insurance against loss, and were particularly more likely to do so when the potential loss was large. A third study, which found that subjects who received a free gift of candy were not willing to pay more for an item than were control subjects, led us to conclude that the results of the first two experiments are not best interpreted as merely due to a general increase in the willingness to spend as a consequence of having received a gift. Instead it was concluded that positive feelings can foster both risk-prone behavior (Experiment 1) and risk-averse behavior (Experiment 2). When a positive-affect subject faces a risk situation in which the potential loss is emphasized, the subject demonstrates risk aversion; when the potential loss is minimized, then risk proneness is observed.     

Magnitude effect contributes to the domain specificity in delay discounting

Discounting is a useful framework for understanding temporal choices. A person who prefers $50 immediately over $100 in 1 month exhibits a higher discount rate than a person deciding to wait for the higher payoff. Although previous research shows that discount rates are domain-specific, we propose an alternative to the domain specificity account. We suggest that differences in discounting alternatives across various domains may result not so much from the domains' nature per se but from differences in perceived attractiveness of the discounted alternatives. We replicated that an illustrative study evidencing domain specificity in discounting (Experiment 1) showed that people's subjective values of the payoffs in domains discounted in this experiment were different (Experiment 2) and used a novel method to match the attractiveness of the available alternatives across domains (Experiment 3). Finally, Experiment 4 showed that when matching was applied, the domain effect disappeared. We conclude that a magnitude effect can, at least partially, explain domain specificity in delay discounting.     

Toward a unified theory of decision criterion learning in perceptual categorization

Optimal decision criterion placement maximizes expected reward and requires sensitivity to the category base rates (prior probabilities) and payoffs (costs and benefits of incorrect and correct responding). When base rates are unequal, human decision criterion is nearly optimal, but when payoffs are unequal, suboptimal decision criterion placement is observed, even when the optimal decision criterion is identical in both cases. A series of studies are reviewed that examine the generality of this finding, and a unified theory of decision criterion learning is described (Maddox & Dodd, 2001). The theory assumes that two critical mechanisms operate in decision criterion learning. One mechanism involves competition between reward and accuracy maximization: The observer attempts to maximize reward, as instructed, but also places some importance on accuracy maximization. The second mechanism involves a flat-maxima hypothesis that assumes that the observer's estimate of the reward-maximizing decision criterion is determined from the steepness of the objective reward function that relates expected reward to decision criterion placement. Experiments used to develop and test the theory require each observer to complete a large number of trials and to participate in all conditions of the experiment. This provides maximal control over the reinforcement history of the observer and allows a focus on individual behavioral profiles. The theory is applied to decision criterion learning problems that examine category discriminability, payoff matrix multiplication and addition effects, the optimal classifier's independence assumption, and different types of trial-by-trial feedback. In every case the theory provides a good account of the data, and, most important, provides useful insights into the psychological processes involved in decision criterion learning.